Global shares slump on China virus economic concerns, gold gains

Global equity markets posted their biggest weekly and monthly loss since August on Friday as growing concerns about the economic impact of the coronavirus outbreak in China sapped risk appetite and lifted the safe-haven Japanese yen and Swiss franc.

Gold posted its best month in five, while yields on U.S. debt fell to almost five-month lows as the United States, Japan and other countries tightened travel curbs to China, where the death toll from the virus rose to 213.

Global crude benchmark Brent notched its biggest monthly decline since November 2018. Economists tempered their outlook for the world’s second-largest economy, as travel curbs and supply chains disruptions are likely to crimp Chinese growth.

Citigroup revised its full-year forecast for China’s GDP growth to 5.5% in 2020 from 5.8%. The bank also cut first-quarter growth expectations to 4.8% from 6% in the fourth quarter of 2019. JPMorgan shaved its forecast for global growth by 0.3 percentage point for this quarter.

Equity markets tumbled more than 1% as disappointing U.S. and European data pointed to economic weakness and a mixed batch of corporate earnings added to the gloom.

MSCI’s gauge of stocks across the globe shed 1.21%, while emerging market stocks lost 1.11%. The world index has lost 1.2 for January, after gaining as much as 2.6% earlier in the month.

In Europe, the pan-European STOXX 600 index closed down 1.07%. Losses for the week were 3%, its worst in almost six months, while the 1.2% monthly loss was the worst January since 2016.

The big blow was that both the French and Italian economies unexpectedly shrank at the end of last year, with Eurostat also confirming that the euro zone as a whole grew slower than analysts had forecast.

Asia-Pacific shares outside Japan extended their fall, dropping 0.4%. Japan's Nikkei bounced 1%, but was off 2.6% for the week. Hong Kong's Hang Seng drifted 0.3% lower and has shed 9% in two weeks.

This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.